The global nature of the online medium and electronic commerce virtually
guarantees that choice of law and conflicts of law issues will arise with dramatically
greater frequency than ever before, simply because the consumer and the vendor will often
not be in the same jurisdiction.(2) The rise in the number of inter-jurisdictional transactions
means that businesses will increasingly be confronted with having to comply with
conflicting regulatory requirements and/or conflicting contractual interpretations, as well
as demands to appear and defend cases in widely dispersed fora. Correspondingly, the
ability of consumers to bring complaints to convenient fora, or to be sure that they will
receive adequate protections, may be diminished.

Many Internet businesses may not be able to cope with these conflicting demands.
In the physical world, as a general matter, the more jurisdictions in which a business
operates and sells, the greater that business's resources and sophistication. A business
that operates on a national or global scale in the physical world would be expected to have
proportionately greater legal savvy and resources. As a result, a business's need to
grapple with conflicts of law issues traditionally has grown in tandem with its overall
ability to handle those issues. On the Internet, virtually every "mom and pop" store that
decides to launch a web site has to cope with the complexities of global commerce. Many
online vendors are small entrepreneurial ventures that cannot afford to be subject to
foreign laws, much less multiple inconsistent rules, or to be "haled into" foreign courts. It
is one thing to ask large global trading companies to sort out the intricacies of traditional
choice of law and conflicts of law doctrines. It is quite another to ask a home business to
comply with conflicting sources of regulatory rules or be subject to multiple remote
courts. In addition, the existence of these conflicting jurisdictional demands creates
uncertainty and unpredictability -- uncertainty that itself is an obstacle to the development
of ecommerce. Increasing interest among local jurisdictions in imposing their own
regulations on every site accessible from within their territory (and in preserving local
dispute resolution options for all consumers in their jurisdiction) poses a serious threat to
the growth of online commerce.

The problem of conflicting regulatory schemes has led to suggestions for global
harmonization of regulatory standards in order to ensure the protection of consumers.
This may, however, be unachievable. It is very difficult and time-consuming to
consummate broadly accepted treaties. If our shared goals are to protect and empower
consumers and to facilitate the growth of ecommerce, then we must recognize that global
harmonization conflicts with these very important values. Cultural and economic diversity
among the countries of the world suggests that conflicting regulatory schemes will
continue to exist. Because consumers have commercial problems that need practical
solutions, calls for "harmonization" may do nothing more than defer resolution of the
problem of unpredictability of applicable law.

One appropriate solution may very well be to allow and encourage private parties
to select from among diverse local rule sets. Many online consumers are responsible
adults whom we permit to engage in foreign travel and foreign commerce. It is time to
look seriously at the question whether and when we are prepared to allow individual
consumers, with notice, to commit by contract to subject certain of their online
interactions to laws and dispute resolution mechanisms differing from those they
encounter when they go out their real world front doors. If we allow end users of the Net
-- consumers as well as merchants -- to select applicable law by contract, and if we defer
to those choices (under certain circumstances outlined in this paper) for purposes of
resolving disputes among private parties, we can have the best of both open, global
ecommerce and a certainty similar to that arising naturally in the real world from knowing
"where" you are and what law and court system will be available to resolve any disputes.

Consumer groups have argued that the law of the consumer's home jurisdiction should
always be applicable to online contracts. They maintain that any other conflicts system
would be dangerous because it would (a) force consumers to rely on unfamiliar consumer
protections, and (b) provide unscrupulous merchants a significant financial incentive to
locate their businesses in the country with the weakest protections -- the so-called "race to
the bottom." But the unique characteristics of the Internet (including instant global
broadcast of information and absence of any physical interaction) actually point towards a
likely "race to the top" among competing businesses and jurisdictions with respect to
choice of law and forum questions. With competitors only a click away (and global
publication of negative comments faster, easier, and cheaper than ever before), vendors
want to make sure that their customers are comfortable and happy. Countries will want to
foster the development of successful and legal ecommerce that contributes to their global
reputations -- thus, they will be interested in creating reputable, consumer-protective legal
regimes that are selected by ecommerce vendors.

The choice of law and forum contractually selected by a consumer with a vendor should
be deferred to under certain circumstances: (1) the chosen law and forum have been
clearly disclosed to the consumer; (2) the chosen forum provides both parties with a
reasonably accessible neutral forum for adjudicating disputes; and (3) the chosen law
provides reasonable, baseline consumer protections. In these circumstances, and with the
further exception of situations involving fraud or having substantial third-party effects
relating to physical importation of goods, jurisdictions should defer to contractual choices
of law and forum.

Examples of consumer contract issues that could be resolved by deference to a
choice of law contractually selected by the consumer and vendor, under conditions where
ample choice was available, could for example include the following:

· Return policies

· Warranties and disclaimers

· Payment requirements

· Limitations on liability

· Waiting periods

· Interpretation of contract terms

These categories of problems should be contrasted with those for which a contractual
choice of law could (and perhaps should) be overridden by the consumer's jurisdiction:

· Fraud

· Shipment of illegal goods to a particular country.

This paper begins with a brief discussion of the history of U.S. conflicts law, by way of
background. It then discusses the conditions under which a consumer's contractually-selected choice of law should be deferred to, and provides suggested additional protective
actions that businesses may want to consider to reduce the overall need for local
jurisdictions to assert their prerogatives to protect local consumers.

Section I: Historical Approaches to Conflicts of Law Issues

In the U.S., theoretical approaches to conflicts of law have varied over time. In
the early twentieth century, conflicts theory was dominated by a form of multilateralism
based on vested rights. Under this theory, every state has a vested right to exercise
jurisdiction and sovereignty in its own territory.(3) Accordingly, a jurisdiction must have
regard for the interests and rights of other jurisdictions with respect to actions taken in
those jurisdictions. Thus, as the First Restatement of the Conflicts of Laws prescribed, the
law to be applied is the law of the place of the action at issue.(4) And in the case where
relevant acts occurred in several jurisdictions, the law of the place of the last act making a
party liable should be applied.(5)

The vested rights approach to conflicts law engendered criticism from many
quarters, most particularly legal realists, who argued that "vested rights do not exist prior
to a determination of what law applies."(6) At least partly in response to such criticisms,
conflicts law began to focus on an approach ostensibly based on an analysis of the interests
of the potentially affected states or governments. Under this interest analysis framework,
a court was to determine whether each state had an interest in having its law applied. If
only one state had such an interest, its law should apply. If multiple states, including the
forum state, had an interest, then the forum state's law should apply.(7) Of course, this
approach does not really resolve conflicts so much as it simply posits that, whenever a
conflict exists, the forum's law should govern.

Criticism of this approach led to the development of a multilateral version of the
governmental interest approach, the so-called "most significant relationship" test set forth
in the Second Restatement. Under this framework, a court is to determine which state has
the most significant relationship to the alleged wrong and the parties, taking into account
factors such as whether the parties live, where their relationship is "centered," and where
the relevant actions occurred.(8) This approach is perhaps best described as a "chaotic
jumble of eclectic approaches" that does little in the way of establishing predictability or
certainty for the parties involved.(9)

Indeed, one of the interesting features of all of these approaches -- versions of
which remain in force in most U.S. states today -- is how little overt attention they pay to
the relevant parties' interests and expectations. Perhaps because of this failing, the notion
of party autonomy as a principle for resolving conflicts of law has gained increasing
acceptance. Under this approach, also contained in the Second Restatement, parties can
choose the law that will apply to their contracts, as well the forum in which disputes will
be heard, unless there is no reasonable basis for the parties' choice (which would suggest a
choice reflecting some significant imbalance in bargaining power),(10) or the choice would
contradict a fundamental public policy of a jurisdiction with a materially greater interest in
the dispute than the chosen forum.(11)

U.S. courts have increasingly enforced contractual choice of law and forum
provisions in consumer-vendor relationships involving "adhesion contracts" (unilaterally
drafted form agreements). Adhesion contracts are enforceable absent a finding of
"unfairness" or "unconscionability." Both of these terms are susceptible of many
meanings. "Unfairness" often means that the weaker party is not in a position to shop
around for better terms, or that the weaker party is so bereft of bargaining power that he
or she has no real choice. "Unconscionability" often means that terms that are grossly
unreasonable in light of the mores and business practices of the time are not enforceable.
Another strand of this test looks to whether the contract terms would surprise a
"reasonable consumer." A finding that a given contract is a contract of adhesion is the
beginning of the analysis, not the end, and courts try to distinguish enforceable adhesion
contracts from unenforceable adhesion contracts.

The leading U.S. case concerning choice of law and forum clauses in an adhesion contract
is Carnival Cruise Lines, Inc. v. Shute.(12) In this case, Eulala Shute, a resident of
Washington State, purchased a ticket for a cruise. Carnival, a Panamanian corporation
with offices based in Florida, sent Shute a ticket with the choice of law and forum
selection clause (selecting Florida) printed on the back. During the cruise, Shute slipped
on a wet deck during a guided tour of the ship's galley. Shute sued Carnival in the state of
Washington. The Supreme Court held that the choice of law and forum selection clause
should be enforced. The Court observed that the use of such clauses was justified for at
least three reasons: (1) because a cruise ship will travel to many locales and might be
subject to litigation in a number of different fora, a cruise line has a legitimate interest in
limiting the places in which it may be sued; (2) such a clause has the effect of reducing
uncertainty and the potential for litigation about the appropriate forum; and (3) the
resulting reduction in costs will ultimately be passed on to consumers in the form of lower
prices.(13) The Court further found that Carnival had not inserted the clause in order to
discourage or unduly burden litigation, and that there was no evidence of fraud or
overreaching.

European law has been less amenable to the enforcement of contractual choices of
law and forum, at least in the context of consumer transactions. The European
Community Convention on the Law Applicable to Contractual Obligations (the "Rome
Convention")(14) generally permits contracting parties to designate the applicable law,
except to avoid the mandatory rules of a country (if all aspects of the contract are closely
connected with the country). This freedom is even more limited in the context of many
consumer contracts for goods or services. Consumers now receive the protections
afforded by their country of residence notwithstanding any choice of law clause if the
contract resulted from targeted vendor advertising or the vendor received the order in the
consumer's country.(15) If none of those conditions apply, then the normal terms of the
Rome Convention govern (allowing choice of law by contract) - even in that case,
however, contractual clauses may not govern because "mandatory" laws are more likely to
apply to consumer contracts.

Section II: Deference Analysis: An Internet-Based Approach to Choice of Law
and Conflicts of Law Problems

Given the confusion and uncertainty in current choice of law theories and the likelihood
that the problems created by this confusion will only be exacerbated in the context of
ecommerce, we need to look for a new solution that takes into account the nature of the
Internet. Although the problems of certainty and predictability in conflicts theory could be
solved by imposing a categorical rule that the law of the seller's country always applies or
that the law of the consumer's country always applies, these approaches are unlikely to be
acceptable in all circumstances: a seller might be in a country with no consumer
protections at all, while a rule requiring a business to conform with the consumer
protection laws of every potential buyer's country is impractical.

The solution may lie in the character of electronic commerce itself. The
characteristics of the Internet (e.g., personalization, global reach, and asynchronous
communication) create substantially diminished risks of "unfairness" and
"unconscionability" in consumers' contracts with vendors. The Internet exponentially
increases the availability of consumer choice and drastically limits the sales pressures that
can create unfairness. Internet users can find alternate sources of goods and services --
indeed, the global nature of the medium means that no user is ever "stuck" with a single
source or a single form contract for a given good or service.

The Internet provides consumers with easy access to vast amounts of information and
facilitates rapid comparison shopping on a global scale. The merchant itself can provide a
large amount of information about its products and services. Consumers can easily turn to
third-party sources that provide additional information, including product reviews, advice
and guidance concerning how to purchase a particular good or service (e.g., information
about the types of available mortgages and tips concerning how to obtain the best rate),
meta-sites that collect and compare competing offers, and reputational information
concerning a particular merchant. The Internet provides consumers with access to up-to-date, easily searchable information about companies' performance history, and the ability
to communicate their own experiences widely to others, making it even more difficult for
unscrupulous companies and individuals to stay in business for very long. Third party
consumer protection organizations also provide another important and useful resource.
All of this information is close at hand and easily accessible.

The rich diversity of sources for products and services available on the Internet, the
absence of sales pressures, and the opportunity for Internet consumers to have far better
access to third-party information about vendors than they possibly could in the physical
world, all make it less likely that ecommerce contracts will be inherently unfair or
unconscionable. Accordingly, choice of law and forum clauses in online adhesion
contracts provide a potentially important source of increased certainty regarding conflicts
of law issues.

It is also true that the Internet provides a forum in which bad actors can act badly.
Many people are rightly concerned about unwanted and aggressive advertising and junk e-mail, and are worried that children will be exposed to pornography and violent material
through the Internet. Several State Attorneys General in the U.S. have pointed out that
while "the Internet offers tremendous commercial possibilities, it also opens the door to a
dizzying array of new applications for old-fashioned consumer scams, as demonstrated by
the substantial volume of Internet-related complaints we receive from the residents of our
States."(16) Because the bad actors will probably always act badly, we need a conflicts of
law solution that will both add to the ability of consumers and governments to address
fraudulent scams and help good merchants -- big and small -- compete within a predictable
marketplace.

Blind deference to parties' choices of law and fora, therefore, is not a sustainable or
justifiable outcome. A local jurisdiction confronted with an online adhesion contract
containing a choice of law and forum clause should ask itself three questions: did the site
provide adequate disclosure of its choice of law; did the site provide for an adequate and
convenient forum for resolving disputes; and does the law chosen provide minimal,
baseline consumer protections.

1. Disclosure

Just as a consumer is currently assumed to know when she has traveled (in the
physical sense) to England that the laws of England will apply to her actions and
transactions, a consumer should have a roughly equivalent awareness that she has
"traveled" to a particular jurisdiction in dealing with a web site that has chosen the law of
a particular jurisdiction to apply to a transaction. Such awareness may arise in a number
of different ways. For example, a "clear and conspicuous" statement of the choice of law
and forum might appear on a screen that the consumer must see before completion of a
transaction. Assuming a sufficiently clear disclosure has occurred, a local court should
defer to the choice of law to which consumers agree as they travel across the Internet in
the same way they accede to the "choice of law" made through physical travel.(17)

New electronic contracting systems may make this type of disclosure easier. P3P,
originally designed to facilitate online negotiation regarding privacy policies, could provide
the groundwork for developing a syntax for electronic offer and acceptance with regard to
various types of contract terms. If the browsers were to incorporate the client side of
standardized choice of law terms -- perhaps providing a checkbox for each of a series of
reasonably protective jurisdictions under the law of which the consumer is prepared to do
business -- and if online servers could also electronically encode their offers to do business
under the laws of particular jurisdictions -- then the resulting electronic "negotiation"
between browser and server would create a record for both sides and a basis for a strong
argument that the bargain was two-sided -- in effect, negotiated -- and ought to be
enforced.

2. Accessibility and Neutrality of the Chosen Forum

Second, the chosen dispute resolution forum must be conveniently accessible to
both the consumer and the site owner. As the Supreme Court found in Carnival Cruise,
where the forum selected is adequately convenient for the consumer and the vendor, the
choice is not unfair or unconscionable.

In the context of the global Internet, an online forum may be the most appropriately
convenient forum for both sides in a transaction. Accordingly, an important next step for
those seeking to promote deference to parties' choices of law and forum is to create,
facilitate, accredit and sponsor reasonably administered online dispute resolution fora.
Such online fora should meet certain basic criteria of neutrality or responsiveness. Such
principles would likely include the following:

· provision of reasonable notice to the parties that their dispute will be heard by the
forum;

· publication of a clear description of its procedures;

· provision of a reasonable opportunity to be heard through the presentation of
argument and evidence, and the offering of evidence in explanation or rebuttal;

· decisionmaking by a neutral, or in the alternative, a demonstrable record of providing
satisfactory handling of consumer complaints; and

· publication of a written statement of the reasons for any decision, except under
circumstances justifying confidentiality.

The American Arbitration Association and other organizations in the United States,
Europe, and other countries have adopted various principles that provide a sound starting
point for the development of online dispute resolution rules.(18)

3. Minimum Protections

The third condition is that the chosen law provide reasonable, baseline consumer
protections. This requirement should not be understood as a proxy for harmonization,
which is, at best, a distant goal, or for whether the chosen law has the same consumer
protections afforded by the law in the local (or consumer's) jurisdiction. Rather, the
inquiry should be whether the chosen law has the minimal consumer protection
characteristics that a legal regime should have in order to make deference acceptable.

Of course, the difficulty here is how to determine minimally acceptable consumer
protections. One approach would be to agree on a set of basic protections, such as the
enforcement of some notion of unconscionability pursuant to which abusive, surprising, or
unreasonable clauses that are so one-sided that no reasonable online consumer would
agree to them will not be enforced. Alternatively, a "club" of countries could emerge and
agree to defer to each other's laws because they trust that, whatever the details of the
consumer protection laws in those countries, each of those countries has the basic
protections necessary to ensure that consumers are protected from unconscionable
behavior by merchants.(19) One way to create evidence of this "club" would be for local
consumer protection agencies in countries wishing to participate to each issue a list of
countries that the agency believes has laws adequately protecting consumers. Such
findings by the agencies could be presented to a court (or other jurisdictional actor)
confronted by a choice of law question as evidence that the law contractually chosen was
minimally protective.

The online vendor's choice of a particular law should be considered, by itself, an adequate
connection to that law, making the choice of that law neither unfair nor unconscionable, if
the criteria of adequate baseline protections and convenient online forum and clear
disclosure are met. Allowing vendor choice of a particular law will permit competition
among bodies of laws and a race to the top by vendors anxious for repeat customers. Just
as we permit sellers of foreign securities to opt in to the protections of U.S. securities
laws, we should permit online vendors not located in the U.S. to chose U.S. law (or any
other adequately protective law) in order to facilitate global ecommerce and permit small
ecommerce companies to compete on equal terms.

4. Exceptions

Two categories of behavior should be excluded from this deference. First,
consumer protection agencies and other enforcement authorities should have the power to
protect their local consumers from fraudulent behavior. Although fraud is a somewhat
elastic term, it typically requires that the accused party make a false representation,
knowing of its falsity and intending the victim to rely on the representation, and that the
victim believe and rely on the misrepresentation.(20) The intent requirement assures that
giving local jurisdictions the power to act against fraudulent behavior will have no effect
on the certainty and predictability needed to conduct legitimate transactions online: as
long as a merchant does not intend to cheat the consumer, it can continue to rely on the
contractual choice of law and fora.

Second, consumer-vendor disputes that substantially affect third parties, such as
the sale and subsequent shipment of illegal goods, should be subject to the authority of the
consumer's local jurisdiction regardless of any contractual choice of law or forum. Where
third party interests are affected and could not otherwise be overcome by means of a
consumer traveling to a foreign country to bring back banned items, a state's interests in
protecting those third parties reasonably should take precedence over the interests and
expectations of the parties to the transaction. Indeed, deference to the parties' choice of
law and forum for the purposes of resolving contractual disputes will not at all displace
local jurisdiction over the shipment or importation of physical goods. Of course, defining
the category of transactions subject to this "substantial third-party effects" exception is not
a straightforward project.

5. Why Deference?

The deference approach outlined above provides a commonsense framework
within which to approach conflict of law issues for online transactions between consumers
and vendors. Reliance on contractual agreements will promote the interest of all countries
in the continued development of ecommerce, encourage predictability for all parties
concerned, and protect commercially reasonable expectations of both consumers and
vendors. These goals are themselves in the interests of consumers.

Existence of the conditions outlined above should lead to local jurisdictions
concluding that their consumers are adequately protected under the contractually-chosen
law of another jurisdiction. Moreover, it is unlikely that any changes in existing law will
be required in order for this deference regime to function. Cross-border trade will change
and grow, and small vendors will have the predictability they need to compete with larger
players.

A great deal of additional work will be required to resolve issues such as what
constitutes the necessary minimum characteristics of an acceptable consumer protection
regime and how to define and cabin the exceptions for fraud and third party effects. The
development of online dispute resolution mechanisms should also be a high priority.

The online environment, with its wide range of choices and plethora of
information, is more conducive to reliance on consumers' contractual choices than
traditional forms of commerce. As a result, as long as (1) consumers know what law and
forum they are choosing, (2) the chosen forum provides them a reasonably accessible
means of adjudicating disputes, and (3) the chosen law has at least baseline protections
against unconscionable actions, local jurisdictions should defer to parties' choices.

Section III: Additional Protections

The choice of law/forum deference regime proposed in this paper may facilitate the
reduction of consumer-unfriendly contractual game playing. Nevertheless, pressure will
continue to build from local regulatory authorities who want to require particular
consumer protection practices. It will be useful for industry to continue to investigate
practices that use the characteristics of the Internet to empower consumers -- and to
spread the adoption of these practices as widely as possible. Such voluntary steps may
have the additional beneficial side effect of convincing local regulatory authorities to avoid
mandating particular consumer protection practices.

Development of such voluntary industry practices will require a good deal of
work. There will need to be continual innovation to support technical solutions that help
consumers -- and currently-successful ecommerce companies have a great deal to teach us
along these lines. The next subsection of this paper lists possible practices that industry
may want to consider.

Disclosures and Redress Mechanisms

"Consumer protection" is an extremely broad field, encompassing everything from
protection against fraudulent activities to required font-sizes for boilerplate legal clauses.
If we assume that a consumer is most interested in being told the truth about the product
or service he or she is about to buy, and getting reasonably fair redress if that product or
service doesn't materialize, it makes sense for industry to focus on the categories of
"disclosures" and "redress" -- which are admittedly broad categories in themselves --
rather than attempting to generate business practices in all the areas of consumer
protection.

1. Disclosure

There are at least three subcategories of disclosures: disclosures about the seller,
about the product or service, and about choice of law and forum. Here are suggested
voluntary practices for these disclosures:

Disclosures about the seller

· The merchant's web site should provide one or more easily available means
for a consumer to communicate with the merchant (such as an e-mail address,
a toll-free telephone number, or a fax number).

· The merchant could participate in a reputational ranking service, such as
bizrate.com, or a labeling regime (such as BBBOnline or WebTrust), that
provides information drawn from consumers about their experiences in dealing
with the merchant.

Disclosures about the product or service

· The merchant's web site should not include deceptive, misleading,
fraudulent, or unfair advertising.

· The merchant's web site should provide an accurate description of the
goods or services being sold.

· The length of an offer should be clear, if it is limited.

· Shipping and handling costs, if any, should be disclosed before the product
is shipped.

· Information about the delivery policy, if any, should be disclosed (e.g., no
COD).

· If security measures are used to safeguard transaction data, they should be
disclosed.

· The type of currency in which the transaction is conducted should be
disclosed.

· A privacy statement regarding the type of personal information the
merchant collects and how it is used, as well as how to decline having
information used for marketing purposes, should be provided.

· The merchant should consider cooperating with comparative pricing
companies by making its pricing information available.

Disclosures about the choice of law and forum

· The merchant's web site should make its choice of law and forum clear.

· Information about any complaint procedure that the merchant makes
available should be stated.

2. Redress

There are at least three modes for redress in the online world: (1) procedures and
remedies that online vendors themselves provide directly to consumers; (2) remedies
provided through payment mechanisms (such as credit card chargebacks); and (3) third-party schemes for dispute resolution (such as online opportunities to complain). Here is a
list of proposed voluntary practices in each of these modes.

Online vendor remedies. Currently, many online vendors have achieved great
commercial success by ensuring that their customers are satisfied. There already exists a
substantial body of evidence about practices that efficiently resolve the problems of online
consumers. This evidence -- including verifiable results -- shows that what some online
vendors do may already amount to "consumer protection." These practices (which could
be provided by vendors who have the resources to do so) include the following:

· The merchant should process orders received by customers within a reasonable
length of time.

· The merchant should confirm orders placed via an e-mail to the customer (thus
giving the customer an opportunity to correct any mistakes).

· The merchant should provide accurate contact information for complaints.

· The merchant should receive and respond to complaint e-mail (or telephone
messages, if applicable) from customers within a reasonable length of time.

· The merchant should comply within a reasonable length of time with any
policies it states related to returns, exchanges, treatment of personal
information, cancellations, and refunds.

· The merchant should provide tracking information via e-mail to the consumer,
letting the consumer know that the product has been shipped and allowing the
consumer to track the shipment when it is on its way.

· The merchant should provide help-desk responses via e-mail, so as to minimize
time-zone issues.

Payment method redress mechanisms

Practices already adopted by the credit card companies may provide useful
protections for customers dealing with vendors who do not have the resources to provide
their own elaborate customer service regimes. If we agree that private sector efforts,
including the adoption of consistent standards and guidelines, represent the best
opportunity for making ecommerce stable and predictable in the near term, the credit card
world provides useful examples of these standards. Most of these standards are based on
"chargebacks" -- a financial deduction from a merchant's account, usually resulting from a
cardmember dispute of a charge. A chargeback may result from a number of situations,
including an unauthorized charge, or a claim that the cardmember did not receive the
goods or services or that they were defective or were not as described. Payment system-based redress mechanisms might include the following:

· The card company will charge back a merchant selling goods delivered physically
(e.g., clothing, books) if the cardmember disputes the charge because the goods
were not received or the charge was unauthorized. The card company will process
this charge back if the cardmember's billing dispute is not resolved during a
reasonable period of time.

· The card company will immediately charge back a merchant selling goods or
services delivered electronically (e.g., software, images) if a cardmember disputes
the charge (for example, claiming it was unauthorized).

· The card company will guarantee that cardmembers will not be held responsible for
unauthorized charges online when they use the particular card governed by this
policy.

Merchants who could not (or did not want to) provide their own dispute resolution
procedures, and who qualified under the card company's requirements (which could
include making the core disclosures identified above) would be able to tell consumers that
they adhered to the card company's rules.

Third party redress mechanisms

A third voluntary route for online vendors to follow within the "redress" category
would be to facilitate reasonable third party redress mechanisms. These could include,
for example, use of an adequate online dispute resolution procedure to which the
merchant agreed to adhere, together with the merchant's agreement to post publicly
information about its adherence to these procedures. Again, many successful Internet
merchants (e.g., eBay and Dell) already have experience with online dispute resolution or
customer satisfaction regimes, and several seal programs (e.g., BBBOnline) are poised to
provide online dispute resolution. There is an urgent need to gather information about
these regimes to ascertain what consumers and vendors are actually doing online to solve
their problems.

Conclusion

The business practices that could be adopted by industry form an endless (and
ever-in-need-of-updating) list. Well-known ecommerce players (who have a track record
of providing customer satisfaction) should contribute to this list, and should compete on
the basis of their ability to find technical solutions to customers' problems. Governments,
however, should not require that any particular practices be adopted -- and none of these
practices should be a condition to the operation of any scheme of deference to choices of
law and forum. The role of government should be to encourage the evolution of
consumer-friendly business practices, as well as fighting fraud, while resisting the urge to
over-regulate (and thereby stifle) the constantly-changing world of global ecommerce.